I always knew Malcolm would have his work cut out for him. I just had no idea things in Canberra were this bad.
I’m guessing I’m not the only one who’s been a tad disappointed with Malcolm.
I did have high hopes. I probably should have known better.
My hope was based on two things. First, I found the change in tone (no pun intended) a relief. I saw Malcolm as a mindset Prime Minister. He immediately got out on the front foot and said we needed to stop living like scaredy cats, worried about future-proofing ourselves – protecting ourselves from the world.
Rather, we needed to get out there and embrace the future and the opportunities it presented.
This aligned with my own view of how to succeed in life. It’s not by hiding from threats, but by actively seeking out opportunities. The future is coming whether you like it or not. You can’t protect yourself from it. But there are always opportunities, for those brave enough to seek them out.
It was a message of hope and something I thought might rally Australians together. It was certainly a welcome change from the ad hoc mix of fear and bluster that Malcolm replaced.
So I thought that Malcolm got it. I think he still does. But we don’t have much to show for it. There’s a glossy PR campaign around our “Innovation Agenda”, but then CSIRO was gutted and mining research got more funding.
Way to future, Canberra.
And I think that reflects the second hope I saw dashed. Part of me hoped that maybe Malcolm could save us from Canberra. Politics is a cess-pool of vested interests and corporate lobbyists, with a twist of religious extremism.
Malcolm was a man from the outside. He knew how to lead. He knew how to bring people together. He knew how to get stuff done.
Malcolm looked like the man to fix it. It was Malcolm’s moment.
But Malcolm’s not winning. Whether it’s the nut jobs in his own party or big-money interests, Malcolm seems to be floundering.
It seems things in Canberra are worse than we thought.
That’s disappointing. If I wasn’t such a half-full kinda guy, I’d even say it’s a bit depressing.
Anyway, I’m sticking by Malcolm. Maybe he’ll pick up his game in the second half. But you’re on notice Malc.
Anyway, I’m thinking about this because Saul Eslake – one of the country’s most famous economists – dug up some stuff Turnbull said about negative gearing a decade ago.
Since Labor went on the offensive over negative gearing, Malcolm has dug in his heels and said that it should stay.
In a recent interview with the ABC, he called it “income tax 101”, going on to say that it is “a fundamental principle of tax law and has been forever that you can deduct from your income the interest expense of money that is borrowed to purchase an income-producing asset”.
But apparently Malcolm wasn’t always such a fan. Well, more’s the point, he saw the nuances involved.
Eslake dug up a speech by Turnbull from 2005 in which he described negative gearing as a form of ‘tax avoidance’, one of the few open to PAYE and other ‘unincorporated’ taxpayers.
Turnbull drew a distinction between the way negative gearing works for companies and for individuals. Companies don’t get the 50 per cent tax discount on capital gains which individuals have done since 1999.
This is how the tax dodge works. Lose money on rents and pay less tax in the short term, make it back up through capital gains discounts in the longer term.
I doubt most mum and dad investors are using it this way, but the popularity of negative gearing with richer folks means it probably is a feature. Malcolm has probably used it that way.
In another 2005 paper, co-authored with the ANU’s Jeromey Temple, Turnbull also argued that “the concessionary taxation of capital gains encourages people to invest in a manner which turns income into capital and, as in the case of negative gearing, allows them to deduct losses at, say, 48.5 per cent and then realise gains and pay tax at effectively half that rate”.
They also went on to say that “Australia’s rules on negative gearing are very generous compared to many other countries”, noting that “the normal deductibility principles do not apply to negatively geared real estate such that the taxpayer is not obliged to demonstrate that the negatively geared property will generate positive cash flow at some point in the distant future”.
And they cited former RBA governor, Ian Macfarlane and other commentators as claiming “this divergence in the taxation of income and capital coupled with negative gearing has contributed to the asset bubble in residential real estate”.
Bubble?? Negative gearing is a tax dodge?
Its easy to throw around talk like that when you’re in opposition or twiddling your thumbs on the back bench.
Prime Ministers have no such luxury.
But so what, Saul. That was ten years ago. Things change, opinions change.
Or they don’t. And maybe people just wake up to the political realities.
This is what the Malcolm mess is showing us. The Prime Minister is not a free man or woman. They are beholden to the party (probably not a bad thing) and captured by lobbyists and big money (definitely a bad thing).
What Malcolm believed 10 years ago, or believes now, is kind of irrelevant.
You’ve got to work with what you’ve got. And Malcolm certainly has his hands full.
Economists getting all snooty is the last thing he needs.
Feeling disappointed by the Malc? Sticking by him?
Reg says
Same pig, different lipstick
Paul camilleri says
Paul
Malcolm is trying to scare none and please everybody at the same time.
I say it is an impossible task, thus his demise is nigh !
Tom says
Different pig, same lip-sync!!!
Stuart says
Sticking by him – Turnbull is a very successful businessman across a range of industries and roles who is self-made and articulate, versus … a union hack. A union hack with question marks around his integrity in his union days. Even if Billy Shorten was a saint selflessly fighting for the rights of downtrodden workers, does that make him qualified to the run the country? Or to put in another way, who is better qualified between Turnbull and Billy to be PM? I’ll take the successful business guy thanks.
Rudolf says
Unfortunately when a new driver of the economy takes the steering wheel, most people expect instant directional changes & corrections……..However, changes to a county’s economics can not be violent, it takes slow & careful nudging to gradually change directions, a bit like a giant ocean liner or oil carrier.
Anyone who recommends wrenching the economic steering wheel is stupid & incompetent, and needs to be locked up, probably for their own safety.
Give Malc. a chance, as he is currently the best hope for us, by far.
Let’s just hope he does not give in to the wealthy self interest groups within his party.
If the opposition with their favoritism towards organized crime and economic incompetence again gets hold of the economic steering wheel we are really in deep sh*t….no 2 ways about it
Tom says
Before the ‘Bully’ was replaced by the ‘Nerd’, Mal the successful ‘ideas-into-practice’ man was able to expound good concepts. Now he is answerable to the real powers behind the throne and is feeling rather uncomfortable, as with limited backing, he assesses the lie of the land. The future Mal will be very different from the former Mal – but does he really have what it takes to be his own man?
Personally, I reserve my judgement, while I wait in hope, with bated breath. Let’s hope that the post-election Mal is more decisive and determined than the pre-election Mal.
Paul says
Well which previous government wanted to bail out of the social housing and wanted private investors to take up the slack. Hence the incentives – NRAS, -ve gearing etc. Seems both parties have lost sight of that purpose and will complain like crazy if the have to pick up that cost again.
peter says
“but then CSIRO was gutted and mining research got more funding.” The CSIRO wasn’t gutted. They (not the Government) decided to redirect some of their budget away from chasing fictional scenarios on climate change (Chicken Little) to more practical research. The actual total amount spent on research wont change much. What’s wrong with that? If mining research is to get more funding, that is good. Australia is very good at mining which uses a lot of technology these days and mining makes us a lot of money. If mining was ended, the modern civilized world would end over night. This is because of all the materials from mining needed to run our mechanized and technological world. Are you suggesting that would be a good thing? Please do your research. And ” religious extremism” in politics, is that socialism?
Simon says
I wish they’d leave the minerals in the ground until they learned to balance the books,
not just for the dutch disease, it does nothing for the economy, govt. just ramps up wastage
peter says
You can’t be serious? Do you want to live in a world with no technology, mechanization or any of the modern-day products we use every day? Without minerals none of that would be possible. Would you access the internet by candlelight? That is if you could even get enough food to eat. And you wouldn’t be able to cook it would you? No electricity of fuel. LOL
Simon says
most of our minerals go overseas, much as I’d like china to have cheap minerals for their own economy, I’d prefer that australia only mined enuf for domestic usage,
If we promote sales of agricultural products, the grass keeps growing and we can keep selling, we shouldn’t have to sell our countries assets to balance the books, we should be able to do that with our own labour
peter says
you fail to understand the basic concepts of economics
Simon says
that australia can only balance it’s books by selling our mineral wealth and overpriced land to chinese investors?
please enlighten me
peter says
Economic prosperity has nothing to do with balancing books. Making a profit so that we can buy other things that we don’t have or make is the point. Free profit-making trade has driven the modern economy and expanded prosperity throughout the world. We are a trading nation that has done well out of free trade and would be impoverished if we adhered to restrictive trade policies that you seem to be advocating. Chinese land buyers can’t take it with them. Mineral wealth only exists when you are willing to sell it. Keep it in the ground and it has no value. It is a myth that minerals are running out. There exists a pyramid of mineral resources (high concentration at top with lower concentration but greater reserves, as you move down) in the world that will enable mining to continue for hundreds of years. They may never “run out”.
There, you are enlightened.
robyn Hefferan says
Once upon a time we were pretty self sufficient, but farms have been decimated, secondary industry off shored etc. Restrictive trade policies? Got us wealthy. Who are they restricting? Not Australia. The latest ‘free trade’ agreements will take us into slavery to multi nationals. It’s time we stopped fighting over which of the two parties is better, honestly, we are in debt, and that means that someone else owns us. That’s Economics 101 – the borrower is the slave of the lender.
peter says
I suspect you haven’t the slightest idea about economics. What you wrote was just a bunch of jumbled emotions. “but farms have been decimated” that says that we have only 1/10 of the farms we previously had or to take the original Roman meaning of the term, 1 in 10 farms were destroyed. This never happened. Our farm economy produces more than ever. How do you explain that? The most prosperous economies in the world are the free trading market economies, usually achieved by financing new enterprise (borrowing money). The only people who are completely self-sufficient are subsistence-farmers. That hasn’t existed in western countries since Neolithic times. Neolithic life then would be hard, brutish and short. Surely you wouldn’t want us to go back to Neolithic lifestyles would you?
Wendy Underwood says
I do not need to write much to show I am not an economist but as a simple person I know you can only sell something once. selling Australian Real Estate especially prime farming land to non Australian owned interests instead of selling what is produced on that land is just short term greed, and a long term disaster
John from Perth says
The only reason Turnbull had initial popularity was because he looked good compared to Abbott who was making incompetent captain calls at the behest of Peta Credlin. Thank god those two are no longer ruining the country. Turnbull is a left winger who should be heading the Labour party instead of the Liberal party.
Australia needs to get back to rewarding effort instead of putting uncompetitive and punitive rates of taxation on contributors to the economy while rewarding bludgers with generous welfare benefits. We only need to look at third world socialist countries like Portugal, Greece, Spain and Ireland to see the damage lefty governments do to a country. The liberals need to kick out Turnbull and put Morrison in charge and get back to cutting government money wasting and start rewarding people for investing and hard work.
Turnbull is correct negative gearing is a tax deduction for valid business expenses and it needs to be kept in place.
Robert says
Negative gearing on property, in combination with government backed ever-increasing property prices is nothing more than welfare for rich bludgers.
John from Perth says
Don’t get sucked into believing all that lefty crap about welfare for the rich. There is not a payment from other taxpayers for valid tax deductions therefor tax desuctions are not government welfare. A tax deduction from gross income means that tax is paid on the net income/profit and that is how it should be unless you want to tax our economy into oblivion.
Simon says
Companies don’t get the 50 per cent tax discount on capital gains which individuals have done since 1999.
John from Perth says
Before 1999 there was indexation on capital gains so that inflation was taken into account and CGT was paid on only the real capital gain. That seems fairer to me.
Simon says
you’d wonder why they changed an obviously fair system,
it can’t be for complexity, they change things to more complex to ’employ’ people
robyn Hefferan says
generous welfare benefits? Wow. Bludgers? Wow. You’ve learned the class lesson well, haven’t you? The divide and conquer lessons. There are some bludgers, but really, this mentality when company after company is putting off workers, young people really struggle to find work, especially full time work, because you know, employers want an army of casual workers so they can keep you on your toes, they don’t have to pay holiday pay or super, and they now don’t have to pay week end wages. This ‘bludgers are taking our money ‘is an old furfy, used every time the elite start squeezing the populace, through the government, often, for every cent they can get, without regard for anyone’s welfare. And let’s not forget that there are plenty of retirees with plenty of money who scrounge around for every free tit bit that they can get, and politicians who have life time pensions that would keep ten families afloat….oh, please, there are thousands of ways the tax payers’ money is wasted, but you can only come up with dole bludgers.
ron goddard says
it seems that the whole world is in a pickle of sorts..ascerbated by polticians and bankers (vested interests). nothing will change. lets not forget that the political climate here is sublime here compared to..well anywhere. and bankers the world over (except iceland) behave like morons. our pm is pushing s..t uphill if he thinks he can ‘get’ australia ‘going’ again. really the last thing we need is a mining boom. the last one bred people like clive palmer(chinese mongrels), gina rheinhardt (jenny criag ad.) and twiggy forrest, (bandwagon twiggy). from 2001-2014..we saw house prices escalate from a mean of $130k(nationwide) to $500k by 2008 and recently to over that 500k mark. this all happened because of our reliance on those chinese ‘mongrels’ pinching our dirt and paying the aforesaid individuals hefty sums of money. the rest of us just kept buying houses etc. to fortify our future. maybe the odd twist here is that neg. gearing as applied to real estate is not what was intended initially. i mean is real estate producing anything for the country? it might surprise many people that the erection of a house in australia is actually an enormous drain on our economy. go figure..imported machinery, too many items to enumerate here imported from overseas. its quite disturbing the energy and resources going into housing. we haven’t learned much from life it seems. too many people doing meaningless jobs. printed money as a means of life support. our national debt is over AU$400bn. now and rising. doesn’t that worry you and other people here? still i guess ‘lotus land’ (us) will survive. see ya soon mate.
ron goddard says
well..after all that malcorismic comment……….it seems that mal has come up trumps in politics and sport.
anyone for footy in shanghai?..port adelaide vs some afl. team or other for premiership points next year. and mal. is giving full support. he reckons afl is super brilliant. another good news story about mal. is that he has just been a signatory to the 57 nation strong vendetta against the usa and its perverted dollar. the leaders of this arsenal of finance are russia and china. joined by another 55 nations including the brits. wow!! thats a dinger. so the us dollar is on the skids and the forecast is for crashing stock and r/estate prices in good ol’ usa. 80% and 50% respectively. can i see a greek tragedy coming? jon get out of us while you can!!!!